Mrs Stella Kilonzo (left), the CEO of Capital Markets Authority, receives the draft information memorandum for the proposed CIC Insurance Group listing from Mr Bob Karina, the MD, Faida Investment Bank.
CIC Insurance has been valued at Sh7.7 billion ahead of its debut at the stock market, making it potentially the third biggest of the five insurers listed at the Nairobi Securities Exchange (NSE).
The capital markets regulators approved CIC’s application for listing yesterday, about a week after clearing publishing company Longhorn Kenya’s bid to join the bourse.
CIC’s ordinary shares numbering nearly 2.2 billion will be listed at Sh3.50 each on the Main Investment Market Segment, the company said in a press release after receiving the regulatory approval.
Chief executive Nelson Kuria said CIC’s priority would be its expansion push into East and Central Africa, starting with Rwanda and South Sudan where the firm plans to partner with the local co-operatives and other organisations rather than opening new subsidiaries.
The insurer has also announced plans to diversify into real estate.
“Some of the international partners are already assisting us in staff capacity building and are ready to commit financial resources in case of viable business opportunities. This (regional expansion and real estate venture) in our view is the fastest and most effective method to achieve growth,” said Mr Kuria.
British American Investment is the biggest of the five listed insurers with a market capitalisation of Sh10 billion, Jubilee Holdings is the second with a valuation of Sh9.8 billion while Kenya Re-Insurance Corporation’s shares are worth Sh7.2 billion as per current market prices.
Fraudulent scheme
The company is expected to list by the end of June through introduction, which means it will not be selling any shares to the public.
Recent allegations by a section of CIC clients who claimed to have lost money through a fraudulent scheme by an ex-employee saw Mr Kuria summoned by the capital markets watchdog. Yesterday, the CMA chief executive, Mrs Stella Kilonzo, said in a statement that the firm had met all listing requirements.
CIC currently has a total of 3,878 shareholders. Co-operative Insurance Society Limited (CIS) is the top strategic shareholder with a 74.3 per cent stake, while individual investors constitute the remaining 25.7 per cent. The CIS represents interests of millions of members in the co-operative movement through the societies that own the co-operative society.
CIC’s gross premiums rose by 48 per cent last year to Sh6.7 billion from Sh4.6 billion in 2010. The total assets grew by 48 per cent from Sh7.5 billion to Sh11.1 billion in the same period.
Shareholders’ total dividend doubled to Sh196 million from Sh95.6 million paid out in 2010. By listing through introduction, present shareholders will be able to unlock the value of their shares though top investors have been locked in for two years. At 2.17 billion shares, CIC Insurance will rank the sixth company at the NSE in terms of the number of listed shares after Safaricom (40 billion), Barclays Bank (5.4 billion) Equity Bank (3.7 billion), Co-operative Bank (3.5 billion), KCB (2.9 billion), and KenGen (2.19 billion).
Alistair Gould, the head of trading and business development at Old Mutual Securities, said the expected high liquidity on the counter will enhance price discovery of the stock.
“Liquid stocks reflect a true market price better,” said Mr Gould.
TransCentury Limited and British American Insurance both saw their share prices plummet soon after their debut last year, as interest rates rose to 18 per cent from six per cent.
Cause of concern
Kestrel Capital chief executive, Andre DeSimone, however, said the CIC stock may not follow the same script.
“It depends on the market conditions at the time of listing,” said Mr DeSimone.
Longhorn Kenya information memorandum says that the publisher will list at Sh14 per share.
Looming uncertainty over the general elections is also a cause of concern that is likely to weigh down the stock market.
Faida Investment Bank Ltd is the lead transaction advisor for the CIC listing, Oraro & Company Advocates and Mboya Wang’ong’u & Waiyaki Advocates are the joint legal advisors, and Kingdom Securities the sponsoring stock broker.
Deloitte and Touche are acting as the reporting accountants and the Co-operative Bank of Kenya Limited as share registrars, while Gina Din Corporate Communications and Nuturn Ltd are the public relations and advertising consultants respectively.
